Unemplyment

1. Explain the difference between frictional, structural, and cyclical unemployment.

Frictional unemployment includes the persons who are searching for jobs or waiting to take jobs in the near future. It includes people who are on temporary layoff, those who are seeking their first job, people who have been fired or waiting to start their next job. In structural unemployment a person may become unemployed because their jobs may be eliminated due to a change in technology or their employer may close. Cyclical unemployment is what is created in a recession or depression when the demand for goods and services decreases creating layoffs. The main differences between these types of unemployment is that frictionally unemployed workers have skills that can be used and they live in an area where they can obtain work. Structurally unemployed workers will not be employed without obtaining additional skills and education. Frictional unemployment is short term and structural unemployment is long term.

2. Water is the most abundant thing on earth. Why would economists say it is scarce?

Answer 1

Our planet contains a large but finite supply of water, therefore based on the economic way of thinking we can only produce a limited product with our current supply of water. Since we have unlimited uses for water and can only produce a limited amount of products from it, water is scarce.

Answer 2

Economists say that water is scarce because at times the need for it is greater than the supply. Some regions suffer from droughts and their natural supplies dry up. In other places water may be available but it is too salty or polluted for human use. So even though it is physically abundant we may not have enough quality water to meet our needs.

3. Why does a fully employed economy have to sacrifice consumer goods in order to have economic growth?

To grow an economy must produce more capital goods (goods for the future) so it can increase its ability to produce. A fully employed...